Plodding pods ... driverless vehicles pass by each other in Masdar City, Abu Dhabi – but it might be quicker to walk. Photograph: Kamran Jebreili/AP

Masdar City is like a mirage: a walled city growing out of the desert sands in the emirate of Abu Dhabi. Yet it is real, and remarkably so; for this intriguing city not only exists but is also one of the most unexpected in the Gulf region or anywhere in the world. Behind those walls and wind towers is one of the world's first zero-carbon cities. I went to see it recently, just shortly before families from across Abu Dhabi turned up in their thousands for The Market @ Masdar City, the first one-day fair designed to showcase the architecture and planning of this brave attempt at shaping a truly sustainable city of the future.

Designed by Foster and Partners for the Abu Dhabi Future Energy Company and set in the desert 17km from the skyscrapers of Abu Dhabi, Masdar is an intriguing experiment in urban design and living. The six square kilometre city – powered by solar energy and other renewable resources – is an attempt to show what kind of future might lie ahead for urban development in the Gulf now that the high-rise city of gas-guzzling towers, that has characterised the region in recent decades, has been increasingly discredited.

Although unlikely to be completed much before 2025, when 50,000 people are expected to live here, the Masdar Institute of Science and Technology (the anchor of the first phase of the city) is up and running. Its buildings, streets and squares give a good idea of how Masdar will be.

The driverless sci-fi pods bumble around the undercrofts of the first phase of Masdar City and it is a wonder that none of them bump into each other. But they move so slowly it may well be quicker to walk. The original idea was for these comic pods to criss-cross the entire city underground so that residents, commuters and visitors could reach any part of it without having to drive, and in the welcome shade. There would have been hundreds of pods. In the event, they have been seen as an all too complex way of getting about. Future phases of Masdar will be pod-free, although cars and lorries will be directed underground, leaving the streets above for pedestrians only.

Walking here is a pleasure. Streets and squares are shielded from the sun, desert winds, sandstorms and heat by thick-walled buildings that provide shade and funnel the breeze between them. Although modern in appearance, these streets and buildings are essentially old-fashioned. With its narrow alleys, deep shadows and wind towers, Masdar follows in the tried and tested footsteps of traditional Arabic towns, where keeping the sun at bay was both a science and an art practised over many generations.

Eventually, there will be homes, businesses, parks and mosques here and Masdar City will relax into its role as an urban sustainability frontrunner. At the moment, it can seem like a theme park aimed at attracting day-trippers, yet these are early days. Gradually, the Jetson-like novelty side of the city – especially those driverless pods – will take a back seat as Masdar matures. The true success of Masdar turns on the recognition that the very old ways of designing and building cities in hot climates are the ones that make most sense: thick walls and carefully directed breezes rather than pods and wind turbines. It's the determinedly ultra-modern aspects of Masdar that prove to be a mirage.